Referee David Coote initially rejected Everton's penalty calls but a VAR check followed and after watching the incident back on a pitchside monitor, he then pointed to the spot.
Farke said in his postmatch press conference: "We are always self-critical but it was definitely the wrong decision to overturn this situation.
"Before the season started, it was said once a player tries to use a situation, a leg for example, in order to create a penalty when he has no chance to create a chance, this penalty is never given and this was exactly such a situation because it wasn't even a chance – Allan put the ball more or less for a goal kick for us.
"He realised the ball was too far away and then used the leg of Kabak, that was a bit too high in the air, in order to dive over this leg and go down.
"The referee had the right decision during the game, he felt this and for that he just pointed for a goal kick. He had a perfect position.
"I'm really disappointed VAR overturned it, (or) forced the referee to rewatch the situation.
"Of course, if you then watch in slow motion, and you also have the pressure of the whole stadium, it's not an easy situation for the referee. I was disappointed he overturned it.
"You can also argue it was unnecessary and a bit naive that Ozan had his leg that high in the air but let's be honest, it shouldn't have been enough to bring Allan down."
Farke also expressed frustration Lucas Digne was not shown a second yellow card with the score at 1-0, saying: "It was definitely a handball. I think then it should be a yellow, red card.
"If you are then chasing a game and you have a one-man overload with still 20 or 25 minutes to go, it would have changed the outcome."
Abdoulaye Doucoure subsequently slotted home Everton's second in the 77th minute.
The result made it six defeats from six for Farke's rock-bottom Canaries in the Premier League so far this term, with their losing run in the top flight, including the final games of the 2019-20 season, now standing at 16 matches.
Farke added: "We are of course disappointed with the result, a loss is always disappointing and not great for the mood and the confidence in the dressing room.
"I've also many compliments for the performance of my lads.
"The key moments in the game were against us and that's tough to take because we're definitely not the worst side today but that's reality, that we lost the game."
Rafael Benitez's Everton, returning to winning ways after their 3-0 loss to Aston Villa last weekend and Carabao Cup exit at QPR, now have 13 points from six games.
While the Toffees had fit-again goalkeeper Jordan Pickford – who made two good saves to deny Mathias Normann – back in the team, they were still without a number of players due to injury, including forward pair Dominic Calvert-Lewin and Richarlison.
Benitez said: "We are playing some players who played too many games because we have the others not available.
"The reaction, the way they behave on the pitch, that they work and play is the best thing for me, for a manager – to see the players not just winning, it is giving everything, and I think the fans will appreciate that.
"Don't forget the players that were scoring goals last year are not available. We are seeing players score goals in different positions and working so hard you have to be really pleased as the manager."